Home > Archives (2006 on) > 2016 > Demonetisation of Currency

Mainstream, VOL LIV No 49 New Delhi November 26, 2016

Demonetisation of Currency

Monday 28 November 2016, by Kuldip Nayar

The debate over the demonetisation of currency reveals that real estate dealers have transacted business only to the extent of five per cent cash and 95 per cent promise. The gap is huge but it reflects the honesty and under-standing of both sides.

The Modi Government fails, however, to convey the impression of integrity. The motive is being questioned and the purpose doubted. And the debate, unfortunately, has got derailed because of too much emphasis on the inconve-nience, not on the step itself.

There is no doubt that the money stacked abroad or lying with the anti-national elements goes out of currency. But the baby has been thrown out with the bath tub. Many honest businessmen abroad will be put to the hard and arduous task of converting the currency lying with them. Some may go out of business. But if it serves the overall purpose, the step is worth taking.

Why the Opposition parties have got together is understandable. The unaccounted money, with which they operate, will not be simply there. The BJP is also being blamed for having told its own people about the demonetisation before- hand to enable them to send their money to the bank.

Karnataka is an example where some currency rupees were deposited on the eve of demonetisation. Good or bad, the step has been taken and it is in the national interest to get together to make the step a success.

There are very few top civil servants or leading politicians without the blemish of having a foreign bank account. But the pressure in India to bring back the black money stashed abroad has been relentless and this demand has become part of a movement to eliminate corruption.

Instead of taking any concrete step, the government seems to be trying its best not to let the gamut of black money come to light. That is the reason why New Delhi is seeking clarifications on the Supreme Court’s indictment: “The issue of unaccounted monies held by nationals and other legal entities in foreign banks is of primordial importance to the welfare of the citizens.”

This is not the first time that the Supreme Court has taken the government to task for dragging its feet on corruption. Earlier, the Supreme Court expressed unhappiness over the way in which the government was investigating the cases connected with black money. The Court had warned the government not to presume that the money hidden in Switzerland was from tax evasion. It could be laundering of the money earned through drugs, terrorism or some other criminal act. The government is yet to give justification for preferring the way of entering into double taxation pacts with foreign countries for having access to the names of evaders.

Indian black money in Swiss banks, according to Swiss Banking Association report in 2006, was the highest—as much as $ 1456 billion. The amount is reportedly more than the deposits by all other countries put together. Amount-wise the figure is about 13 times larger than the country’s foreign debts. With this amount, it is estimated, some 45 crore people in India can get Rs 1 lakh each.

After clearing the entire foreign debts, it is calculated that we would be left with a surplus, almost 12 times larger than the total foreign debts. If this surplus is invested, the amount of interest will be more than the annual budget of the Central Government. So if all the taxes are abolished, even then the Central Government will be able to abolish most of them and still have a cushion.

Expressing lack of faith in probe the Supreme Court constituted a Special Investigation Team (SIT) headed by two retired Supreme Court judges to chase all black money-related cases. The Court itself is supervising the pace of investigation. While pronouncing the verdict, the Supreme Court observed: ”Politicians, bureaucrats and businessmen are known to park their funds abroad and then try to get them into the country through foreign institu-tional investors’ route.”

Very pinching remarks but every word is true. I wonder if there would be any effect on the government which has shown little agility to pursue the cases of black money abroad. It was obvious that the Congress-headed government did not want certain names to come in the public domain because the disclosures would embarrass it.

Now this government has been caught on the wrong foot. It received some time ago as many as 26 names from Germany under the double- taxation treaty. Berlin had got hold of names of hundreds of beneficiaries and had offered them to all in the country for their asking. New Delhi could not afford to say no. But why did the then Finance Minister, Pranab Mukherjee, say that the names of beneficiaries could not be disclosed? If they are under obligation not to disclose them, the fault is that of New Delhi. The Supreme Court has overruled the contention and has asked the government to make the names public. Still the government is not agreeable to do so.

The BJP and its allies in the National Democratic Alliance have said that they have no money abroad. This statement should have acted as a pressure on the Congress and its allies. The government has no option except to make the 26 names public. Then the fat will be on fire.

I have never seen India so deeply immersed in corruption as it is today. At the same time, I have not heard so much criticism of government before. What I miss is the resistance and someone from the society getting up and calling a spade a spade.

Scrutiny by due process is understandable, but the process is so slow and so manoeuvered through corruption itself that it is not possible to catch or punish the guilty for years. The government must devise a machinery whereby the allegation of corruption is sifted for a prima facie case within days.

The author is a veteran journalist renowned not only in this country but also in our neighbouring states of Pakistan and Bangladesh where his columns are widely read. His website is www.kuldipnayar.com

ISSN : 0542-1462 / RNI No. : 7064/62 Privacy Policy Notice Addressed to Online Readers of Mainstream Weekly in view of European data privacy regulations (GDPR)